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With tax breaks coming, what's next for the UK games industry?
With tax breaks coming, what's next for the UK games industry?
March 22, 2012 | By Mike Rose




There was an excited air about the place as developers, lenders, lawyers and students made their way into the Gamasutra-attended Westminster Media Forum in London, England today, with the aim to discuss the next steps for the video game industry in the UK.

While Richard Wilson, CEO of video game trade body TIGA, today thanked the UK Government for "putting faith in the video game sector" with yesterday's announcement of tax relief in the video game sector, he warned that there is "no room to be complacent."

The unexpected news from the day before regarding proposed tax breaks for the industry had thrown the prepared conversations somewhat, although this did little to deter discussions -- rather, the various speakers appeared even more excited for what the future holds for the UK's video games.

Where next for tax breaks?

There were a number of resounding key points that were brought up time and time again throughout the day. The first, of course, was the tax breaks which are due to be put in place early next year.

Wilson headed up the discussion, noting that while it was undeniably great news for the sector, there was still plenty of work to be done before it could be called a success.

He and other industry speakers noted that the government is yet to describe the exact terms of the tax breaks, and that these need to be put together as soon as possible, "efficiently and effectively." As Jim McGovern, treasurer for the parliamentary group for video games, noted, "the devil is in the detail."

Another Parliament member, the Liberal Democrat's Culture Committee man Don Foster, put it as follows: "There's been a lot more talking the talk than walking the walk... now let's begin walking the walk."

These tax relief initiatives may not be on the table forever, warned Wilson, and we as an industry need to show that they work, and bring money and commerce into the country.

A number of panelists speaking today voiced their concerns over the potential blocking of the tax relief plans by the European Commission in Brussels. A communication from the Commission earlier this month stated that not all games qualify as audiovisual or cultural works, and therefore should not receive state aid in Europe.

In fact, the draft from the Commission went as far as to say that aid for games should be considered "on a case-by-case basis" -- compare this to aid for film, which is not subject to this rigmarole.

Will the European industry unite behind these new plans in the UK? Sean Dromgoole, director at Some Research, said, "I don't think we'll encounter any difficulties," although he noted that if Brussels was to intervene, it would be "absolutely awful."

Decision making

On the topic of UK studios and their ability to adapt and survive in the new and rising video games markets, Richard Wilson noted that "too many studios commit suicide" by not taking on advice from outside sources.

Self-publishing is especially dangerous when coupled with a lack of advice from a mentor or big name in the industry, he warned. Nicolas Lovell, director of Gamesbrief and Gamasutra contributor, agreed, noting that UK studios need to learn to adapt, and be resilient to changes.

Lovell also urged developers to embrace digital games and, in particular, the free-to-play model. The digital sector is causing "massive damage" to studios who are failing to adapt, he warned. "Don't let entrenched dinosaurs ruin it all for us," he said, referring to developers who continue to push boxed games.

"I am the dinosaur Nick is referring to," laughed David Braben. He admitted "Nick is right," given that digital video game sales are set to engulf boxed game sales over the coming years, but also made the point that sales of boxed games are still estimated to grow over the next years, and that completely ruling them out is not the right thing to do.

Boxed game sales took a huge blow in the UK yesterday, of course, with retailer Game Group going into administration. EA's UK VP Keith Ramsdale, while disheartened by the job losses that will occur if the company completely falls through, admitted that his company isn't too worried for its own finances.

Game is just "one retailer out of many," he said, while noting that sales of both Mass Effect 3 and FIFA Street, neither of which were supplied by Game on launch day, had been "pleasing" without it.

He did suggest, however, that he believes "there will be a phoenix rise from the flames" of what is now Game Group -- perhaps a potential buyout from an outside party -- but that it would need to be "much more multiformat" and work platforms such as the iPhone and iPad into its offerings in order to survive.

Overall, there was a real sense of direction in Westminster today -- direction which has arguably been missing for a while now -- and with new, hopefully achievable goals now in place, the future is looking increasingly bright for the UK video games industry.

Whether it will all pan out smoothly is difficult to call -- most likely there won't be anything smooth about it. As long as the upcoming tax relief stays true to its word, however, our export of developers to Canada and the like may well soon begin to quell.


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